Editor’s note: This article is part of our JLL proptech series, produced in cooperation with JLL, a leading professional services firm that specializes in real estate and investment management. We believe in transparency in our publishing and monetization model. Read more here.
What should we expect from the property technology (proptech) space in China? Is it growing as much as we expect? What are some of the innovative technologies coming out of this large traditional industry?
These are some of the questions we have asked throughout our deep dive into the proptech space. We’ve looked at the Internet of Things (IoT), exploring how it helps to reveal the inner workings of a building’s brain. We also examined the ways blockchain can help the real-estate industry, making for smoother, faster, and simpler transactions, as well as bigger picture look at the overall impact of technology on the whole space.
One important question remains: How much do we know about the players in the space that are actively working to change things?
The infographic above reflects the outcome of our research. In it, we present the names of the notable startups and companies across almost a dozen categories who are working to bring innovation to the proptech space.
The three key takeaways:
1. Innovation in the proptech space is multi-dimensional and complex.
Part of doing due diligence in the proptech space is understanding who are the players and where are they focusing their effort. Change in such an industry often requires the involvement of many stakeholders, such as corporates, governmental organizations, retailers, and consumers, taking a significant amount of time.
“Buyer behavior is often unpredictable and establishing immediate ROI is a key challenge,” says Anuj Nangpal, APAC Lead JLL Spark, a global proptech venture fund. “Startups often have to stretch across industries and levels to understand who their customers’ customers are, and serve them in order to see a change in their immediate sphere of effect.”
While such networked cooperation is not unique to the proptech space, the multi-faceted nature of working in this industry means that there is a need to deeply understand not only your partners but also who your partners interact with. This is because it is a heavily regulated industry and, more often than not, the final offerings to the consumer are largely similar.
For example, building many different housing complexes all aim to solve one basic need—accommodation. However, it is worth noting that the industry is highly differentiated between countries, and networks built up in one market usually are not transferable to another.
2. Proptech in China is more than just co-working or property management.
The proptech space is very much alive and well, and solutions have been proposed from adjacent industries such as environmental technology, data insights and analysis, and integrated supply chains, both in the B2B and B2C space.
“Enterprise technology is coming of age in China,” says Nangpal. “There is ABC (AI, big data, cloud) everywhere in the consumer space, but it is steadily making its presence felt in the B2B world. This will have deep implications on how real estate is transacted, managed and consumed.”
In fact, we have charted at least 11 distinct separate technological industries working to change proptech for the better.
The beauty of the proptech industry is that much of the space is still up for interpretation. Startups, and even multinational corporations, are all trying hard to redefine what proptech will mean for the consumer in the near future, given ever-changing natural and built environments. Companies in this space will have to serve not only the end users, but also will affect long-term government planning, climate change, and even how our children learn and play.
3. Proptech still has high barriers of entry for startups.
Companies in the proptech space tend to be larger and well-financed, and it helps to be backed by still larger companies such as JLL or other property-related conglomerates. As sales and technology cycles tend to be longer side in this sector, companies need larger sums to sustain cash flow and also R&D. Expect to see more consolidation in this field in China in the near future.
“Chinese cities now represent half of the top 10 most expensive premium office rental locations worldwide. We are witnessing exponential increase in IT spending by developers and asset owners,” Nangpal says. “Foreign investors have significantly increased their allocations to China. So we have a perfect mix for consolidation and innovation in tenant experience, property & asset management, capital allocation and space optimization.”
In addition to the physical barriers that impede entry into the proptech space, we observed that incumbent and prominent players have large amounts of social capital that arguably is even more important for operating in this industry, namely trust.
Often, deals and contracts are executed solely based on a high level of trust between partners. This is especially true in the case of deals involving governments. That’s another reason why consolidation is looking more likely is because startups can tap into the social capital of larger conglomerates thereby accelerating the implementation of new technologies in the market.